Running the Gauntlet at Wal-Mart

The process of selling to the behemoth of Bentonville starts well before you push open the doors of its Arkansas headquarters. But it's within the fortress itself that the dream (or nightmare) of working with Wal-Mart really begins.

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Anthony Misuraca was two years out of college and bored stiff working at an insurance company in Oklahoma City when a colleague showed up at work one day with a small plastic jar filled with a homemade sauce. The colleague asked him to try it, and Misuraca gently dipped his finger into the jar and put a dab of the sauce on the tip of his tongue. Surprised, he blurted out, "That's great! What is this stuff?"

"I call it honey mustard salad dressing," said the co-worker.

Thus was born a partnership: Two eager but wet-behind-the-ears entrepreneurs had found the product that was, they hoped, going to make them rich. And, for a time, it looked as if it just might--never more so than in 1992 when a Dallas wholesale broker offered to introduce their product to a buyer at Wal-Mart. By then, Misuraca and his partner had gotten their salad dressing, labeled Country Gourmet Foods, into virtually every major grocery chain in Oklahoma. The Wal-Mart buyer, Misuraca says, liked the product and liked the story--especially the fact that it was all natural. But he didn't like the price. If Wal-Mart was going to take on the product, the price would have to come down from $2.25 a jar to a rock-bottom "buck seventy-nine." The price scared Misuraca but he was, he says, intent on selling to Wal-Mart no matter what. So he relented and walked away with an initial order for 1,300 cases--this for a two-man firm used to selling "maybe 130 cases a week."

At first, Misuraca was exultant. After a while, though, he began to wonder how he and his partner would make that much salad dressing. How would they finance it? Where would they line up the production equipment? But even that didn't deter him:

He was going to be a Wal-Mart millionaire.

Who wouldn't want to sell something to Wal-Mart? It is, after all, the world's largest corporation. Its annual revenue of $244.5 billion exceeds the gross national product of Saudi Arabia. On just one day in 2002--November 26, to be exact--it did a record $1.43 billion in sales, which is more than the annual output of the entire state of Kentucky. This is a company whose 2,936 discount stores, Super Centers, and Neighborhood Markets--and more than 520 Sam's Clubs--eat up more than 30% of the entire production lines of multinational giants like Kraft Foods and Philip Morris. This year alone, Wal-Mart will build 210 new Super Centers. And with each new store, there's room for more product.

It's not surprising, then, that the demand for new products and new lines at Wal-Mart is unending. Its appetite is insatiable, says Fred Traylor, a Bentonville-based vendor and broker who makes his living both selling to Wal-Mart and counseling others on selling to Wal-Mart. "The buyers there are always on the lookout for the Next Big Thing. And they don't care who provides it--whether big outfit or small."

There is, however, a caveat, warns Traylor. The infamously tough buyers at Wal-Mart, he says, "play for keeps. If you're a small vendor, and you fail them once, they'll never forget. You're on their shitlist for life."

But if you succeed...well, there are a whole lot of shelves to fill.

"People think there's some big secret to selling to Wal-Mart," says former company COO Don Soderquist, for 22 years a member of the Wal-Mart board of directors. "There isn't. We always ask the same two questions: Do you have a product that our customers want? And can you price it low enough for us to sell it?"

But while there is no magic formula, says Soderquist, "there is a method" (see "How Wal-Mart Says You Should Sell to Wal-Mart"). Just what that method is and how it works is deeply rooted in the culture not only of Wal-Mart but also of northwestern Arkansas. In an attempt to understand the culture and the process, we spoke with numerous vendors, brokers, and Wal-Mart executives. Many of the brokers and vendors, fearing that anything they said might damage their relationships with Wal-Mart, refused to be quoted unless their names were withheld. What emerged from these interviews is a culture that is rooted in an odd juxtaposition: The biggest corporation in the world has its headquarters in one of the nicest and, until recently, most isolated little towns in America. Welcome to Bentonville (population: 23,500).

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